Posted: Thursday, 11 August 2016 @ 10:56
A recent High Court case has highlighted the extent to which commercial landlords need to take care when carrying out works to property which are likely to cause disturbance to tenants.
Timothy Taylor Limited had a high class modern art gallery in Mayfair, for which it was paying a very substantial rent to the landlord Mayfair House Corporation. The Landlord carried out extensive redevelopment works to the upper floors of the building, not occupied by the tenant, to create new residential apartments. The landlord was entitled under the terms of the lease to carry out the works, but the lease also contained a covenant for quiet enjoyment.
The questions for the court were had the landlord breached the express covenant for quiet enjoyment, and had it also breached the implied covenant not to derogate from the grant of the lease? The answers depended on the extent to which the landlord had acted reasonably.
Some key facts were that the tenant was operating a very high end art gallery paying a very substantial rent, the landlord had not offered the tenant a rent rebate, and the landlord had not adequately consulted with the tenant at an early stage and had underestimated the time the works would take. A significant finding was that the scaffolding had been erected in a way that obscured the tenant's gallery to the extent that it was not obvious to passers by that it was open for business, and that the scaffolding could have been erected in a way which would have lessened the impact and reduced noise nuisance.
Whilst there was no contractual obligation on the landlord to offer reduced rent, the judge stated that failure to do so raised the bar when it came to showing that all reasonable efforts had been taken to minimise the disruption to the tenant. Failure to consult at an early stage and properly identify the level and length of disruption also deprived the tenant of the opportunity of arranging temporary alternative accommodation.
The judge found that the landlord was in breach both of the covenant for quiet enjoyment and the implied covenant not to derogate from grant, and awarded substantial damges to the tenant based on 20% of the rent.
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